Estate Planning

Responsibilities of Inheritance

Responsibilities of Inheritance

Estate Planning

According to a 2012 national study[1], “the average person in their 20s, 30s, and 40s who was given an inheritance or large financial gift quickly lost half the money through spending or poor investments.”[2] In response to the findings, Jay Zagorsky, the author of the study, said, “[t]he fact that people spent about half is disappointing in some ways, but not shocking.”[3] Zagorsky further states, “[m]aybe if you know in advance that most people spend half of their inheritances, you can prepare in advance and restrain yourself from spending that much.”[3]  

The following are suggestions for beneficiaries to keep in mind prior to spending their inheritance:

  • Initiate a cooling-off period: Prior to making exorbitant purchases or promises, have a trusted financial advisor prepare an in-depth analysis of your financial picture.
  • Consider funding an emergency savings account: Life happens, which is why, as a rule of thumb, you should have an emergency savings that covers between three to six months of living expenses.
  • Pay off debts: When analyzing whether to pay off one debt over another, always consider what rate of return you would receive from an investment in the financial market. In other words, if the interest rate of the debt is larger than the expected return on an investment in the financial market, it is generally a good idea pay off that debt.
  • Maximize retirement contributions: Lastly, if possible, use some of the inherited funds to prepare for your future by maximizing the annual contributions to your retirement account.  

 

[1] Zagorsky, J. L. (2012). Do People Save or Spend Their Inheritances? Understanding What Happens to Inherited Wealth. Journal of Family and Economic Issues, 34(1), 64-76. doi:10.1007/s10834-012-9299-y

[2] https://theconversation.com/how-winning-1-54-billion-in-mega-millions-could-still-lead-to-bankruptcy-105275

[3] https://news.osu.edu/most-americans-save-only-about-half-of-their-inheritances-study-finds—ohio-state-research-and-innovation-communications/

Important Disclosure Information: The information contained within this blog is for informational purposes only and is not intended to provide specific advice or recommendations. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Schultz Financial Group Incorporated), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Schultz Financial Group Incorporated. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Schultz Financial Group Incorporated is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Schultz Financial Group Incorporated’s current written disclosure statement discussing our advisory services and fees is available for review upon request. Please Note: Schultz Financial Group Incorporated does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Schultz Financial Group Incorporated’s web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Where you want to go in life is up to you. How to help you get there is up to us.

Contact us today to start your journey…

Contact

Schultz Financial Group Inc.
10765 Double R Blvd. Suite 200
Reno, NV 89521
Phone: (775) 850-5620
Fax: (775) 850-5639
Email: info@sfginc.com

Where you want to go in life is up to you. How to help you get there is up to us.

Contact us today to start your journey…

Contact

Schultz Financial Group Inc.
10765 Double R Blvd. Suite 200
Reno, NV 89521
Phone: (775) 850-5620
Fax: (775) 850-5639
Email: info@sfginc.com

 

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